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Total Cost of Ownership

Written by Mark Arman, Vice President of Business Development | January 10, 2012

With IT managers tasked with supporting more mission critical projects from managing BYOD to virtualization to cloud computing initiatives, IT personnel need to work smarter and more efficiently. Technology that provides business value while simplifying internal IT tasks is an important piece of the puzzle that leads to more strategic initiatives.

To that end, unified communications has become critical to businesses but the TCO does not have to put enterprises in the red when deploying and maintaining these systems.

I’ve been able to demonstrate to numerous CIOs that Cisco’s capital cost is less than 10 percent of the product’s total financial impact over a 7-10 year period. With such a low upfront percentage of total cost, why would anyone ever make a significant business decision based solely on initial purchase price? In fact, I’ve helped our team close many deals where the ShoreTel proposal is significantly more than the initial Cisco price, but where the customer understands the significant long-term TCO implications of buying Cisco.

The reason that TCO is important is that it is an objective measure of the total financial impact over the life of a product. It also demonstrates that there is a significant cost of “doing nothing” – by staying with a legacy TDM system. Most importantly TCO enables faster and more accurate consensus between technology and financial decision makers inside the customer organization.

According to Alinean research:

90% of US Corporations now require quantifiable proof of bottom-line benefits for significant IT projects.

However, 65% of buyers indicate a lack of knowledge or tools needed for business value assessments or calculations.

81% of buyers therefore expect vendors to provide tools to help quantify the business value of proposed solutions.

Very few buyers (17%) have a high degree of trust in vendor value assessments without third-party validation.

The recent Aberdeen study confirms 1) that TCO is critical for measuring the relative benefits and costs of alternative UC solutions and 2) what we’ve been saying all along – ShoreTel offers a significant structural and sustainable competitive advantage when it comes to TCO.

ShoreTel, as an ecosystem, competes on value, not price – which is how we can continue to sustain the industry’s lowest TCO It’s also why ShoreTel has the highest gross margins in the industry and consequently why we are able to spend 20 percent of our revenue on future innovation.

We have a unique fully distributed architecture – providing the most reliable, easiest to use, and easiest to scale system with the lowest TCO in the industry. Our architecture delivers more benefits – high satisfaction rates for our customers, high win rates and high gross margins for our channel. Our reseller and value added distributors are willing to invest more when they know they can expect the best economic outcomes for their customers and for their own businesses.

The Aberdeen survey reinforced this with findings that:

Each ShoreTel IP phone deployment took less than 53 minutes to complete compared to Avaya Aura which took over 2.5 hours for each phone.

The average salary of a system administrator was over 30% less for a ShoreTel system than for a Cisco UCM system.

The cost for recurring training for a ShoreTel system was found to be over 85% less than the recurring training cost for an Avaya IP Office system.

Check out the full report and don’t miss the webinar with Aberdeen to discuss the results on Jan. 25.